morning note/Payroll time

June Payrolls are expected to fall by 365k after a drop of 345k in May (which was well above estimates of a drop of 520k). With ADP reporting job losses of more than 450k in the past two months, I believe the odds are against another big upside surprise and the only question will be whether it surprises to the downside. The unemployment rate is expected to rise by .2% to 9.6% which would be the highest since June ’83. In the recession in the early 80’s, the rate peaked at 10.8%. Average hourly earnings are expected to rise .1% for a 3rd month and would be the slowest 3 month pace since ’03. A top Chinese official said he didn’t know about any plan to discuss an alternative to the US$ at next week’s G8 meeting and the $ is rising in response. Also helping the $ was a surprise rate cut in Sweden, Ireland losing its Aaa rating from Moody’s and the May Euro zone unemployment rate ticking to the highest level since May ‘99. The ECB left rates unchanged as expected.

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